LCI Industries today (Nov. 2) reported consolidated net sales for the third quarter of $555 million, 35% higher than the 2016 third quarter net sales of $412 million.

Net income was $32.1 million, or $1.26 per diluted share, for the third quarter, ended Sept. 30, compared to net income of $29.8 million, or $1.19 per diluted share, a year ago.

The increase in year-over-year net sales reflects industrywide growth in wholesale shipments of towable and motorized RVs by OEMs, which increased 26% and 13%, respectively, in the third quarter of 2017, enhanced by solid growth in content per unit and acquisitions. Net sales from acquisitions completed by the company over the 12 months ended Sept. 30 contributed $24 million in the third quarter of 2017. The organic growth rate was 29% for the third quarter and acquisitions provided the remainder of the 35% increase.

Through continued focus on aftermarket channels for the company’s products, the LCI increased net sales to the aftermarket in the third quarter by 34% to $49 million.

“The RV industry growth trend in 2017 remains strong as third quarter wholesale RV shipments were up 24%,” stated Jason Lippert, LCI’s Chief Executive Officer. “RV sales momentum has continued as the industry attracts a new generation of RV enthusiasts, supported by strong economic growth. Orders appear to be strong going into the final quarter as dealer sentiment remains bullish and OEMs continue to add capacity to meet demand. Additionally, we continue to see strong growth in our aftermarket sales. We are expecting October 2017 consolidated net sales to reach approximately $205 million, 40% higher than October 2016.”

LCI’s content per travel trailer and fifth-wheel RV for the 112 months ended Sept. 30 increased $147 to $3,172, compared to the 12 months ended September 30, 2016, of $3,025. This is the largest increase in seven quarters for travel trailer and fifth-wheel RV content. The company’s content per motorhome RV  increased $195 to $2,152, compared to $1,957 the year prior. The content increases are a combined result of organic growth, including new product introductions, as well as acquisitions and changes in the types of RVs produced industry-wide.

“Our operating profit in the third quarter of 2017 improved 6% to $47.9 million,” said Scott Mereness, LCI president. “Strong industry growth and accretive acquisitions completed over the last year have contributed to profit growth for the quarter. We continue to focus on cost management as well as investments in lean initiatives and other operational efficiencies to further improve operating margin while maintaining on-time deliveries to support the growth of the business.”
The improvement in the company’s operating results were partially offset by continued increases in input costs, primarily steel, aluminum and direct labor. Aluminum costs have increased in excess of 20% over the prior year. Labor continues to remain a challenge with Elkhart County unemployment rates at less than 3%. As a result of these increased input costs, the company has enacted price increases, which are anticipated to fully impact the first quarter of 2018.
Additionally, LCI has implemented a number of cost-saving initiatives, resulting in severance charges of $1.3 million, or 3 cents per diluted share, in the third quarter of 2017. These initiatives, along with the price increases, are expected to improve operating income by approximately $38 million annually, or 1.9% of operating margin, on the current run rate.